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Altice's (ATUS) Q1 Earnings Top Estimates, Revenues Miss

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Altice USA, Inc. ATUS reported mixed first-quarter 2021 results with the bottom line beating the Zacks Consensus Estimate but the top line missing the same. Despite a challenging macroeconomic environment, the company recorded higher broadband revenues and solid customer additions. Driven by a resilient business model, this growth momentum is likely to continue in 2021.

Bottom Line

Net income in the March quarter was $274.1 million or 58 cents per share against net loss of $0.9 million or breakeven per share in the prior-year quarter. The improvement was primarily attributable to loss on investments and sale of affiliate interests in the prior-year quarter and lower operating expenses in the reported quarter. The bottom line surpassed the Zacks Consensus Estimate by 29 cents.

Altice USA, Inc. Price, Consensus and EPS Surprise

Altice USA, Inc. Price, Consensus and EPS Surprise
Altice USA, Inc. Price, Consensus and EPS Surprise

Altice USA, Inc. price-consensus-eps-surprise-chart | Altice USA, Inc. Quote

Revenues

First-quarter total revenues increased 1.2% year over year to $2,478.8 million, primarily on higher Broadband revenues (up 9.6%), accompanied by accretive customer base. However, the top line missed the consensus mark of $2,506 million.

The company witnessed solid demand for its broadband service and a 39% year-over-year increase in average data usage per customer. In the reported quarter, broadband-only customer usage averaged 613 GB per month. The company has accelerated the deployment of 1-gig services, which are currently available in more than 92% of its geographical footprint. Residential revenue per customer relationship declined 0.8% year over year to $142.24 from $143.39.

Business Services revenues improved 0.7% to $367.2 million as a result of Lightpath’s healthy momentum in the education and healthcare verticals, driven by elevated connectivity requirements during the pandemic. Meanwhile, News and Advertising revenues remained relatively flat with gradual recovery in local and regional advertising.

Notably, the company covered more than 1 million households with FTTH (fiber-to-the-home) technology at the end of the reported quarter. With an optimistic outlook, Altice USA is committed to accelerating its future FTTH deployment initiatives and enhancing both CAPEX and OPEX efficiencies following the completion of its FTTH build, supported by improved customer experience.

Other Details

Operating income improved to $608.5 million from $448.6 million in the year-ago quarter. Adjusted EBITDA was $1,074.8 million compared with $1,031.4 million in the prior-year quarter. In the first quarter, Altice repurchased 15.2 million shares for an aggregate price of about $522.7 million, at an average price of $34.43.

Cash Flow & Liquidity

For the first three months of 2021, Altice generated $749.6 million of net cash from operating activities compared with $593.6 million in the prior-year period. Free cash flow in the first three months of 2021 was $536.8 million compared with $294.5 million in the year-ago period. As of Mar 31, 2021, cash and cash equivalents were $220.8 million with net debt of $24,905 million.

2021 Outlook Restated

Despite adversities stemming from the COVID-19 pandemic, Altice remains confident of its ability to deliver revenue and adjusted EBITDA growth in 2021 while maintaining leverage and share repurchase targets. The company currently anticipates capital expenditures in 2021 to be within $1.3 billion to $1.4 billion with a year-end leverage target of less than 5.3x.

Zacks Rank & Stocks to Consider

Altice currently has a Zacks Rank #4 (Sell).

A few better-ranked stocks in the broader industry are Cambium Networks Corporation CMBM, Ooma, Inc. OOMA and Corning Incorporated GLW, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cambium delivered a trailing four-quarter positive earnings surprise of 128%, on average.

Ooma delivered a trailing four-quarter positive earnings surprise of 163.7%, on average.

Corning delivered a trailing four-quarter positive earnings surprise of 39%, on average.

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